Taiwan shares are expected to fall amid concerns over the global financial system as fate of the US government's 700 billion dollar bailout plan remains uncertain, dealers said Friday.
Market confidence has been further undermined after the index fell below the key 6,000 point level Friday with pessimism about the weakening domestic consumption due to the toxic Chinese milk product scandal, they said.
Investors have even perceived Thursday's surprise interest rate cut by the central bank as a negative sign, they added. The market may test the nearest support at around 5,700 points next week, while any technical rebound is likely to boost the bourse to the 6,000-6,100 point resistance, dealers said.
For the week to September 26, the weighted index fell 40.75 points or 0.68 percent at 5,929.63 after a 5.39 percent increase a week earlier. Average daily turnover stood at 88.72 billion Taiwan dollars (2.77 billion US), compared with 91.70 billion dollars a week ago.
The market fell 2.16 percent on Friday, making weaker than some of its counterparts in the region. "Market sentiment is very poor. It seems to me that the bourse was eager to react to negative cues from the slow economy but ignored the positive effect in cost savings for the banking sector," Concord Securities analyst Allen Lin said. "With uncertainty over the US bailout plan, investors may further cut their holdings next week," Lin said. Lin said as domestic demand remains low, investors had better avoid old economy stocks, such as food, cement and textile.
Taiwan International Securities analyst Arch Shih said if the market fails to hold itself above 5,700 points, it is possible for it to test 5,500 points soon. "The fall to 5,500 points is expected to prolong market consolidation," Shih said.
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